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It is anticipated that Canada and Korea will exchange initial tariff offers for agricultural and non-agricultural goods in early November 2005 and that both Parties will subsequently submit requests for improvements to the other Party’s tariff offer. To ensure that Canada’s priorities, interests and concerns are fully taken into account in our negotiating strategy, International Trade Canada would like to hear your views on issues pertaining to tariffs, rules of origin and non-tariff measures.

Canada - Korea Merchandise Trade

In 2004, South Korea was Canada’s seventh-largest merchandise trading partner, with Canadian merchandise exports totalling $2.3 billion, and imports from South Korea nearing $5.8 billion. While the commercial relationship is solid, both countries recognize that there is considerable scope for growth. The Free Trade Agreement (FTA) negotiations offer the possibility of greatly improving market access for Canadian exporters, including in areas of key export interest through the elimination of tariffs and non-tariff barriers.

In the agricultural sector, Canada’s top exports to South Korea include wheat, pork, animal or vegetable fats and oils and furskins. Top imports include pasta, preparations of cereals, citrus fruits and pears. Canada’s top non-agricultural exports to South Korea include a predominance of primary products (pulp and paper, mineral products, wood and wood products and fish), as well as non-ferrous metals, organic and inorganic chemicals, information technology (IT), medical and scientific equipment and industrial machinery. On the imports side, Canada’s top imports from Korea include higher-valued manufactured products: in 2004, vehicles and parts and information technology products together accounted for nearly 59% of total Canadian imports from Korea. Other key imports in 2004 included industrial machinery, iron and steel, ships, electrical machinery, rubber and various textiles and apparel products.

Korea has bound approximately 91 per cent of its tariff lines as a result of the Uruguay Round negotiations and, as of 2003, Korea had an overall MFN applied tariff of 12.4 per cent and an average MFN applied rate of 6.9 per cent on industrial products. Duties remain high on a large number of agricultural and fisheries products. As a member of several of the WTO Uruguay Round zero-for-zero initiatives, Korea eliminated its tariffs on toys, steel, furniture, construction equipment and agricultural equipment, and most paper products. Korea was also a founding member of the 1996 Information Technology Agreement and, like Canada, has eliminated all tariffs on these products.

WTO rules require that in the context of an FTA, both Parties must eliminate tariffs on substantially all trade.